Okun’s law over the business cycle: was the great recession all that different?
In 1962, Arthur Okun posited an empirical relationship between the change in the unemployment rate and real output growth. Since then, the media, policymakers, pundits, and intermediate macro students have used the so-called Okun’s law as a rule of thumb to relate changes in unemployment to changes in output growth. However, some studies have suggested that the relationship has not been stable over time. Furthermore, the slow recovery of U.S. unemployment relative to output after the Great Recession has led some to question whether Okun’s law has changed permanently. In this light, the authors reconsider the evidence on instability in Okun’s law and, in particular, examine whether the Great Recession has contributed to the breakdown of the empirical relationship.
Volume (Year): (2012)
Issue (Month): Sep ()
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lawrence J. Christiano & Mathias Trabandt & Karl Walentin, 2010.
"Involuntary unemployment and the business cycle,"
FRB Atlanta CQER Working Paper
2010-03, Federal Reserve Bank of Atlanta.
- Mathias Trabandt & Karl Walentin & Lawrence J. Christiano, 2010. "Involuntary Unemployment and the Business Cycle," 2010 Meeting Papers 129, Society for Economic Dynamics.
- Christiano, Lawrence & Trabandt, Mathias & Walentin, Karl, 2010. "Involuntary unemployment and the business cycle," Working Paper Series 1202, European Central Bank.
- Christiano, Lawrence J. & Trabrandt, Mathias & Walentin, Karl, 2010. "Involuntary Unemployment and the Business Cycle," Working Paper Series 238, Sveriges Riksbank (Central Bank of Sweden), revised 01 Jun 2012.
- Lawrence J. Christiano & Mathias Trabandt & Karl Walentin, 2010. "Involuntary Unemployment and the Business Cycle," NBER Working Papers 15801, National Bureau of Economic Research, Inc.
- Clifford L. F. Attfield & Brian Silverstone, 1997. "Okun's Coefficient: A Comment," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 326-329, May.
- Edward S. Knotek & II, 2007. "How useful is Okun's law?," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 73-103.
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